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Supreme Court
New South Wales
Medium Neutral Citation: Nexgen Sydney Pty Ltd v Barakat [2020] NSWSC 1169
Hearing dates: 28 August 2020
Date of orders: 31 August 2020
Decision date: 31 August 2020
Jurisdiction: Equity - Applications List
Before: Williams J
Decision: The notice of motion filed by the fourth defendant and the first respondent is dismissed.
Catchwords: PRACTICE AND PROCEDURE – search orders – application by fourth defendant and first respondent to discharge search orders made in respect of their premises – where search orders obtained by plaintiffs on an ex parte basis – where evidence relied upon by plaintiffs to obtain search orders included an affidavit in support sworn by second defendant – where second defendant subsequently swore a further affidavit in which he stated that he did not give first affidavit voluntarily – whether the plaintiffs improperly obtained and relied upon the second defendant's first affidavit – second defendant's first affidavit not improperly obtained – search order regime not discharged
PRACTICE AND PROCEDURE – Harman obligation – where plaintiffs relied on affidavits served by defendants pursuant to an earlier undertaking given to the court in the same proceeding in an ex parte search order application – where the defendants' affidavits were not read in evidence prior to the plaintiffs making the ex parte search order application – whether the plaintiffs breached the Harman obligation – no breach in circumstances where affidavits relied upon by plaintiffs in the same proceeding
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), Part 25
Cases Cited: Computershare Ltd v Perpetual Registrars Ltd (2000) 1 VR 626; [2000] VSC 139
Harman v Secretary of State for the Home Department [1983] 1 AC 280
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
Hooper v Kirella Pty Ltd (1999) 96 FCR 1
Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133
Category: Procedural and other rulings
Parties: Nexgen Sydney Pty Ltd (First Plaintiff)
Business Telecom Pty Ltd (Second Plaintiff)
Samantha Barakat (First Defendant)
Shane Mitchell (Second Defendant)
Mina Youssef (Third Defendant)
Easytel Australia Pty Ltd (Fourth Defendant)
Easytel Group Pty Ltd (First Respondent)
John Hanna (Second Respondent)
Amanda Youssef (Third Respondent)
Dali Marsic (Fourth Respondent)
Representation: Counsel:
Mr C H Cassimatis (Plaintiffs)
Mr A J Hourigan (Defendants/Respondents)
Solicitors:
Madison Marcus (Plaintiffs)
United ACL (Defendants/Respondents)
File Number(s): 2019/370803
Publication restriction: N/A
Judgment
1. These reasons for judgment relate to a notice of motion filed on 6 August 2020 by the fourth defendant, Easytel Australia Pty Ltd (Easytel Australia), and the first respondent, Easytel Group Pty Ltd (Easytel Group) (the Motion).
2. The first defendant in this proceeding, Ms Samantha Barakat (Ms Barakat), is a former employee of the first plaintiff, Nexgen Sydney Pty Ltd (Nexgen).
3. The third defendant, Mr Mina Youssef (Mr Youssef), is a former employee of the second plaintiff, Business Telecom Australia Pty Ltd (Business Telecom). The second defendant, Mr Shane Mitchell (Mr Mitchell) is also a former employee of Business Telecom.
4. The two plaintiffs, Nexgen and Business Telecom, are related entities. It is convenient to refer to them collectively as the plaintiffs, except where it is necessary to distinguish between them.
5. Ms Barakat, Mr Mitchell and Mr Youssef each resigned from their employment with Nexgen (in the case of Ms Barakat) and Business Telecom (in the case of Mr Youssef and Mr Mitchell) and commenced new employment with either Easytel Australia or Easytel Group.
6. By notice of motion filed in court on 15 May 2020 and heard by me as Equity Duty Judge on an urgent, ex parte basis, the plaintiffs applied under Part 25 of the Uniform Civil Procedure Rules 2005 (NSW) for orders permitting them to search the business premises of Easytel Australia and Easytel Group and seize certain material (the Search Order Application).
7. At the time of the Search Order Application, Mr Andrew Stewart of Stewart Partners was the solicitor on the record for the plaintiffs (Mr Stewart). Mr Stewart was assisted by his employed solicitor, Mr Houssam Saadat, who is known as Sam Saadat (Mr Saadat).
8. On 15 May 2020, I made orders including the following:
"4. An order that Andrew Stewart and Sam Saadat, solicitors for the plaintiffs to enter the premises located at Suite 102, Level 1, 18-20 Ross Street, Parramatta (Premises) and search for, inspect, copy and remove the things described in the short minutes of order annexed and marked "A" (search orders) and on the condition that:
a. Andrew Stewart and Sam Saadat give and comply with the applicants' solicitors' undertakings set out in schedule B in the search orders;
b. the plaintiffs give and comply with the undertakings numbered 7, 8 and 9 in schedule B of the search orders.
5. An order appointing John Chidiac and Simon Maxwell and of Sanford Legal, as independent solicitors to supervise the execution of the search order at the Premises on the condition that they give and comply with the undertakings for independent solicitors in schedule B of the search orders.
6. An order that Jarret Le Roux be appointed as an independent computer expert to search any computer and make a copy or digital copy of any computer hard drive and permit the independent computer expert or the independent solicitor to remove any computer hard drive and computer from the Premises on the condition that he gives and complies with the independent computer experts undertakings in schedule B of the search orders.
7. An order that until further order the fourth defendant and the respondents, by their servants, agents or representatives, are prohibited from entering, modifying or deleting any data in any and all cloud storage accounts and any and all cloud email accounts.
8. An order that until further order the fourth defendant and the respondents, by their servants, agents or representatives, are prohibited from accessing any cloud storage and cloud emails by 5pm on Wednesday 20 May 2020."
1. My reasons for making those orders were the subject of a short ex tempore judgment, the transcript of which is annexed to these reasons as Annexure "A". The transcript records the nature of the substantive issues in this proceeding.
2. In the period since 15 May 2020, steps have been taken to execute the orders made on that date, and certain other orders have been made ancillary to the execution of those orders.
3. By the Motion, Easytel Australia and Easytel Group (referred to collectively as Easytel, unless it is necessary to refer to those entities individually) sought four categories of relief:
1. an order that orders 4, 5, 6, 7 and 8 made on 15 May 2020 be discharged (or, alternatively, a declaration that Ms Barakat, Mr Youssef, Easytel Australia and Easytel Group have complied with those orders and/or are not required to comply further with those orders);
2. an order that the plaintiffs pay the costs of Ms Barakat, Mr Youssef, Easytel Australia and Easytel Group of and incidental to the orders made on 15 May 2020 on an indemnity basis (or, alternatively, on a party-party basis);
3. an order that Stewart & Associates and/or Mr Andrew Stewart and/or Mr Sam Saadat be restrained from acting on behalf of the plaintiffs in these proceedings; and
4. an order that the Applicants' costs of the Motion be paid by the plaintiffs on an indemnity basis (or, alternatively, on an ordinary basis).
1. By the time the Motion was heard on 28 August 2020, Stewart & Associates, Mr Stewart and Mr Saadat had ceased acting for the plaintiffs, voluntarily and without making any admission or concession. It was therefore not necessary to determine the third category of relief sought by Easytel.
2. Easytel relied on the following evidence in support of the Motion:
1. affidavit of Mr Mitchell affirmed on 28 July 2020;
2. affidavit of Mr Peter Mustaca, the solicitor for Easytel, affirmed on 13 August 2020 and the documents exhibited to that affidavit (comprising documents relied on by the plaintiffs in support of the Search Order Application and correspondence between the plaintiffs' solicitors and the solicitors for Easytel concerning delay in providing or failure to provide to Easytel the transcript of the hearing of the Search Order Application), and the transcript of the hearing that was ultimately provided by the plaintiffs' solicitors on 15 June 2020; and
3. paragraph 28(c) of the affidavit of Mr Youssef affirmed on 11 August 2020, and an email chain between Mr Mitchell and Mr Youssef dated 2 March 2020 (which was tendered as Exhibit 2).
1. The plaintiffs relied on the following evidence:
1. affidavit of Mr Ayoub sworn on 25 November 2019 (paragraphs 1 to 54 only);
2. affidavit of Mr Ayoub sworn on 28 November 2019;
3. affidavit of Mr Ayoub sworn on 29 April 2020;
4. affidavit of Mr Mitchell sworn on 12 May 2020;
5. affidavit of Mr Saadat sworn on 14 August 2020 and the documents exhibited to that affidavit;
6. affidavit of Mr Ayoub sworn on 21 August 2020;
7. affidavit of Ms Suzanne Abdullah sworn on 21 August 2020; and
8. an interim report of McGrathNichol dated 25 August 2020 (which was tendered as Exhibit 1).
1. Mr Hourigan of counsel appeared for Easytel and Mr Cassimatis of counsel appeared for the plaintiffs.
2. Both counsel provided written submissions in advance of the hearing and made further submissions orally. I have considered all submissions made, but have focussed in these reasons on the submissions relating to the issues that were determinative of the Motion, being the matters emphasised in counsel's oral submissions at the hearing of the Motion. I have taken that approach in view of the desirability of delivering judgment quickly, having regard to the fact that the proceedings are listed for final hearing before Ward CJ in Eq commencing on 7 September 2020.
Application for discharge of orders 4, 5, 6, 7 and 8 made on 15 May 2020
1. The Applicants submitted that orders 4, 5, 6, 7 and 8 made on 15 May 2020 should be discharged for the following reasons:
1. the evidence of Mr Mitchell in his affidavit sworn on 12 May 2020, on which the plaintiffs relied in support of the Search Order Application was improperly obtained by the plaintiffs and should not have been read in support of the Search Order Application. If that affidavit had not been read, there would not have been a proper basis for the Court to make the orders on 15 May 2020;
2. further, the plaintiffs' obligations referred to in Harman v Secretary of State for the Home Department [1983] 1 AC 280 and Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 required that they seek the leave of the Court to rely on affidavits of Ms Barakat and Mr Youssef affirmed on 13 December 2019 in support of the Search Order Application. The failure to seek that leave could not be cured by a submission that, if leave had been sought, it would have been granted;
3. the plaintiffs failed to provide a copy of the transcript of the hearing of the Search Order Application to the independent solicitor, and failed to serve a copy of the transcript on Easytel Australia and Easytel Group when executing the Search Orders, which constituted a breach of the undertaking given to the Court by the plaintiffs' solicitor in paragraph 3(d) of Schedule B to the plaintiffs' notice of motion filed in Court on 15 May 2020, namely:
"The applicants' solicitor will provide to the independent solicitor for service on the respondent copies of the following documents:
…
(d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court…"
1. in further breach of the undertaking given to the Court by the plaintiffs' solicitor in paragraph 3(d) of Schedule B to the plaintiffs' notice of motion filed in Court on 15 May 2020, the plaintiffs have still not provided a copy of the "Separate Transcript" referred to at the end of the transcript of the hearing of the Search Order Application on 15 May 2020. (I note that the "Separate Transcript" is the transcript of my reasons for making the search orders on 15 May 2020, that is Annexure "A" to these reasons. I also note that I caused my Associate to provide a copy of that transcript, which had been checked by me when the transcript became available after the hearing on 15 May 2020, to both parties on 27 August 2020. My chambers has no record of any party requesting a copy of that transcript.)
1. As I understood the submissions, Easytel rely on the conduct referred to in (1) and (2) above as an abuse of process that resulted in the plaintiffs obtaining the search orders and it was submitted that those orders ought now be discharged by the Court in the exercise of its inherent jurisdiction to control its processes.
2. The submissions made on behalf of Easytel did not emphasise the matters in (3) and (4) above, save to say that they were further matters that "counted against the plaintiffs". It was not submitted that those matters, by themselves, warranted discharging the orders made on 15 May 2020.
Preliminary issue: inappropriate form of relief sought in the Motion
1. Counsel for Easytel accepted that order 4 made on 15 May 2020 has already been discharged by execution. There is therefore no utility in making an order that order 4 is discharged.
2. Counsel for Easytel also accepted that orders 5 and 6 had already been discharged to a large extent. He submitted that the independent solicitors and independent computer expert were continuing to undertake work, in that they have custody of certain materials seized and they are reviewing or supervising the plaintiffs' solicitors reviewing some of that material in accordance with other orders made by the Court after 15 May 2020. If the 15 May 2020 orders were obtained by abuse of process, it seems to me that there would be little utility in discharging orders 5 and 6 without also discharging the relevant orders made after 15 May 2020 and making an order for the delivery up of material seized to Easytel. I invited counsel for Easytel to identify any other orders that might be relevant for this purpose. No other orders were identified, and no claim was made for any order requiring the return of material seized.
3. I put to counsel for Easytel, and he accepted, that Rees J made orders on 21 May 2020 requiring certain things to be done in connection with orders 7 and 8 made on 15 May 2020. After those things were done, Rees J made a further order on 25 May 2020, the effect of which was to discharge orders 7 and 8 made on 15 May 2020.
4. As I have referred to above, the Motion sought alternative relief in the form of declarations that Ms Barakat, Mr Youssef, Easytel Australia and Easytel Group have complied with the orders made on 15 May 2020 and/or are not required to comply further with those orders. The evidence relied on by Easytel did not establish the steps taken by Ms Barakat, Mr Youssef or Easytel to comply with the 15 May 2020 orders. If those orders are not discharged, then the factual basis for the declarations sought has not been established and it would be inappropriate to make the declarations.
Alleged abuse of process: Was Mr Mitchell's affidavit sworn on 12 May 2020 improperly obtained?
1. As will be clear from the transcript of my reasons for judgment on 15 May 2020, the evidence in Mr Mitchell's affidavit sworn on 12 May 2020 formed the principal, although not the sole, basis for my decision to make the search orders on that date.
2. Counsel for Easytel accepted (correctly, in my view) that, for the purpose of the Motion, they bore the onus of proving that Mr Mitchell's affidavit sworn on 12 May 2020 had been improperly obtained by the plaintiffs.
3. In his affidavit affirmed on 28 July 2020, Mr Mitchell deposed that:
1. he had read the statement of claim in this proceeding for the first time on about 25 July 2020;
2. he had a telephone conversation with Mr Ayoub on or about 8 May 2020, which was initiated by Mr Ayoub passing a message to Mr Mitchell through others that Mr Mitchell should call Mr Ayoub. During the conversation, which Mr Ayoub told him that he was in trouble, he was guilty of fraud and he was going to jail, but offered Mr Mitchell a deal that, if he would "sign an Affidavit about Easytel in front of our Solicitor", Mr Ayoub would pay him $3,000 and he could return to work for the plaintiffs. Mr Mitchell says that Mr Ayoub told him "This is your only way of not going to jail";
3. he was scared and did not want to go to jail, and that he told Mr Youssef about the "deal" that Mr Ayoub had offered him;
4. he received a phone call on 11 May 2020 from a man who identified himself as Nexgen's lawyer, arranging to meet him at Nexgen's office the following day (12 May 2020) "so we can sort all this out and so that you do not have to go to jail";
5. he went to Nexgen's office on 12 May 2020, feeling very scared, where he met a man who identified himself as "Sam" and said "I am Nexgen's lawyer. We spoke yesterday";
6. he spent a whole day at Nexgen's office, where Sam typed on his laptop, asking him "generic type questions" and looking at a folder of emails already in Sam's possession at the start of the meeting,;
7. the questions asked by Sam "do not bare [sic] any resemblance to what is in my affidavit of 12 May 2020 which I signed";
8. he signed his 12 May 2020 affidavit because he was scared and he did not sign it voluntarily;
9. he was not asked to swear to or affirm the truth of the contents of his 12 May 2020 affidavit before signing it;
10. he was not provided with a copy of the 12 May 2020 affidavit when he signed it, and only received a copy about three days later. When he read the affidavit at that time, he did not recognise the affidavit as what he had discussed with Sam at the meeting on 12 May 2020;
11. he was not paid the $3,000 allegedly promised to him by Mr Ayoub or Nexgen;
12. he didn't do anything about the affidavit because he had been told he would be left out of the proceedings and he just wanted to avoid it;
13. about a week after signing his affidavit, he asked Sam why he had not been taken off the proceedings and Sam told him that this could not be done now "because Easytel's barrister would think something funny has gone on";
14. he did two weeks' work for Business Telecom commencing on 7 July 2020;
15. he learned on about 27 July 2020 that his 12 May 2020 affidavit had been used to obtain the search orders;
16. he has never met Tara Burnie (referred to in his 12 May 2020 affidavit as a telemarketer with whom he worked with at Easytel) and has no idea who she is;
17. he denies having said that he was passed hard copy leads by Ms Youssef at Easytel (contrary to paragraph 41 of his 12 May 2020 affidavit);
18. he denies that there were filing cabinets at Easytel's office, or that he drew filing cabinets on the plan of Easytel's office annexed to his 12 May 2020 affidavit; and
19. he denies having seen hard copy folders labelled Nexgen or Business Telecoms whilst he worked at Nexgen.
1. In his affidavit sworn on 21 August 2020, Mr Ayoub deposes that:
1. Mr Mitchell initiated contact with him by phoning him on 7 May 2020;
2. at the outset of that telephone conversation, Mr Mitchell said that he wanted to discuss "the Easytel matter" and Mr Ayoub told him that he should have legal representation, and that the plaintiffs had evidence that "things have been done wrong" and "we have [Ms Barakat] and [Mr Youssef] on record saying they have taken things";
3. Mr Mitchell then disclosed to Mr Ayoub that he had emails he had sent to Mr Youssef containing details of Nexgen and Business Telecom customers and that there was "Nexgen hard copy applications in the Easytel office and Business Telecom applications stored in folders";
4. Mr Ayoub then told Mr Mitchell: "The only way we can sort this out is you going on record or coming in with your solicitor. You should get legal representation, or you should bring someone with you";
5. Mr Mitchel then said: "I will come in and tell you everything I know";
6. Mr Mitchell attended Nexgen's offices at about 9:00am on 11 May 2020. Mr Ayoub, Mr James Harb and Mr Saadat sat down with Mr Mitchell, who handed over some documents;
7. at about mid-morning, Mr Saadat required everyone else to leave the room so that he could take an affidavit form Mr Mitchell;
8. after the meeting, Mr Ayoub created a WhatsApp group including Mr Mitchell, Mr Saadat and Mr Ayoub. Mr Mitchell subsequently sent a number of documents to Mr Ayoub and Mr Saadat via the WhatsApp group. The WhatsApp messages annexed to Mr Ayoub's affidavit show that Mr Mitchell was sending copies of emails and other messages through to the WhatsApp group between about 8:00pm and 10:00pm on 11 May 2020, after being reminded that "we need information only if it has relevance to the case only i.e. if they have Nexgen clients databases, lead sheets etc". Mr Mitchell responded, "ok no problems I will go through everythink [sic]" and "yeah I'm looking for relevant stuff only";
9. Mr Ayoub denies ever telling Mr Mitchell that he would go to jail, or saying that he was guilty of fraud, or offering him money to provide an affidavit; and
10. he gave Mr Mitchell two weeks' work for Business Telecom as a contractor because he felt sorry for him after Mr Mitchell told him that he wanted to come back to work for the plaintiffs and he had just purchased a home with his partner.
1. In his affidavit sworn on 14 August 2020, Mr Saadat denies that Mr Mitchell's 12 May 2020 affidavit was prepared in the manner described in Mr Michell's 28 July 2020 affidavit. Mr Saadat gives a detailed account of his conferences with Mr Mitchell leading to the preparation of that affidavit, the salient aspects of which may be summarised as follows:
1. he met with Mr Mitchell all day at Nexgen's offices in Parramatta on 11 May 2020 (Mr Saadat is certain of the date, because he has records of the parking fees he paid all day in a nearby carpark on 11 May 2020, which are exhibited to his affidavit);
2. Mr Mitchell told him during that meeting that he had received a "big bundle of documents" at his mum's house relating to the court proceedings concerning Nexgen and Easytel;
3. he told Mr Mitchell that he should get a lawyer, that he (Mr Saadat) could not advise Mr Mitchell, as he was acting for Nexgen;
4. Mr Mitchell responded that he did not need legal advice and just wanted to tell the truth;
5. Mr Mitchell agreed to Mr Saadat taking notes and asking questions while Mr Mitchell talked;
6. during the meeting, Mr Saadat did take notes as Mr Mitchell talked (a copy of the notes is exhibited to Mr Saadat's affidavit), Mr Mitchell provided documents (a copy of which is also exhibited) and indicated that he could provide further documents, which he subsequently did (a copy of documents sent subsequently is also exhibited);
7. Mr Mitchell agreed during the meeting to provide an affidavit;
8. Mr Saadat then began drafting the affidavit based on what Mr Mitchell had told him;
9. no person other than Mr Saadat and Mr Mitchell was in the room while the affidavit was drafted;
10. Mr Saadat went through the draft affidavit with Mr Mitchell and made changes at his request;
11. Mr Saadat then printed a copy of the resulting draft, and Mr Mitchell read through it and made further handwritten changes to three paragraphs (a copy of the draft affidavit bearing handwritten changes that Mr Saadat deposes were made by Mr Mitchell is exhibited to Mr Saadat's affidavit, and Mr Saadat deposes that the original is available for examination by a handwriting expert if required);
12. at Mr Saadat's request, Mr Mitchell drew a diagram of the Easytel office, including the location of filing cabinets referred to in his 12 May 2020 affidavit as containing hardcopy folders labelled "Nexgen" and other documents labelled "Business Telecom", inside which were lead sheets, contracts and client information of the plaintiffs' customers and prospects. Mr Mitchell drew a second, more detailed, diagram at Mr Saadat's request. Copies of both diagrams are exhibited to Mr Saadat's affidavit and, again, Mr Saadat deposed that the original documents are available for examination by a handwriting expert if required;
13. Mr Mitchell read through a final version of the affidavit on 11 May 2020 before swearing it that afternoon, taking the oath before Mr Saadat (a copy of the affidavit executed on 11 May 2020 is exhibited to Mr Saadat's affidavit, and Mr Saadat again deposes that the original document is available for examination by a handwriting expert if required);
14. on 12 May 2020, Mr Mitchell telephoned Mr Saadat and said that some dates in the affidavit should be corrected; and
15. after these corrections were made, the affidavit was executed by Mr Mitchell and witnessed by Mr Saadat by audio visual link on the afternoon of 12 May 2020. Mr Mitchell confirmed before executing that he had read the affidavit and was happy with its contents. He took the oath administered by Mr Saadat before signing the affidavit.
1. Mr Saadat also deposes that, on about 11 June 2020, Mr Mitchell contacted Mr Saadat to say that he had been threatened by Mr Youssef and Mr John Hanna (a director of Easytel). Mr Mitchell said that he had already spoken to the police about this, but he wanted Mr Saadat to "put this on the file" and to prepare another affidavit because "I want the Court to know that these guys are threatening me". Mr Saadat agreed to prepare another affidavit if that was what Mr Mitchell wanted to do. Mr Mitchell swore an affidavit about these threats before Mr Saadat on 11 June 2020. Mr Saadat exhibits a copy of that affidavit to his affidavit of 14 August 2020, and deposes that the original document (including the address handwritten by Mr Mitchell and Mr Mitchell's signature) is available for inspection by a handwriting expert if required.
2. The following matters raise serious doubts about the credibility of Mr Mitchell's evidence in his affidavit of 28 July 2020:
1. if Mr Mitchell had not received any documents relating to this proceeding before about 25 July 2020 (as he now says he had not), it is difficult to understand why he would have taken seriously the alleged statements by Mr Ayoub that he was guilty of fraud and could go to jail and why he would have signed an affidavit because he was scared of going to jail (as he now says he did); and
2. if Mr Mitchell swore the initial version of his first affidavit on 11 May 2020 involuntarily and only under threat of going to jail and/or under promise of being paid $3,000 (as he now claims), it is difficult to understand why he voluntarily sent further information to the WhatsApp Group established by Mr Ayoub late on the evening of 11 May 2020 (after the initial version of the affidavit had been sworn), and even more difficult to understand why Mr Saadat was the person to whom he turned on 11 June 2020 asking to make another affidavit concerning the threats that he said he had received from Mr Youssef and Mr Hanna.
1. The first matter makes Mr Ayoub's account of his initial contact with Mr Mitchell in May 2020 inherently more credible than Mr Mitchell's account, in my opinion. Easytel offered no theory about why Mr Mitchell would have returned to Mr Saadat if Mr Mitchell's evidence in his 28 July 2020 affidavit is otherwise believed. Nor did they adduce any evidence from Mr Youssef or Mr Hanna denying the making of threats to Mr Mitchell.
2. The second matter, together with the meticulous contemporaneous records kept by Mr Saadat of his conferences with Mr Mitchell on 11 and 12 May 2020 and 11 June 2020, make Mr Saadat's account of how the 12 May 2020 affidavit was prepared more credible than Mr Mitchell's account. If the authenticity of any of those contemporaneous records were disputed by Mr Mitchell, it is to be expected that Easytel would have:
1. taken up Mr Saadat's invitation to have the original documents inspected by a handwriting expert at some time in the two week period between the date of Mr Saadat's affidavit and the hearing of the Motion; and/or
2. sought leave to cross-examine Mr Saadat on the hearing of the Motion. (I note that I specifically inquired at the outset of the hearing whether any party proposed to cross-examine any witness. I was informed that there was no application for leave to cross-examine.)
1. Easytel submitted that Mr Mitchell's account was more believable, and urged me to accept his account and reject Mr Saadat's account. However, the rejection of Mr Saadat's account would inherently involve finding that Mr Saadat, an officer of the Court, had lied about what occurred on 11 and 12 May 2020 and 11 June 2020 and had fabricated the documents exhibited to his affidavit in order to corroborate those lies. In my view, such serious findings should not be made against an officer of the Court without those matters being put to him in cross-examination, particularly where there is no other evidence that casts doubt on the authenticity of the documents exhibited to Mr Saadat's affidavit as contemporaneous records of his meetings with Mr Mitchell that led to the preparation of the affidavits now in dispute.
2. For completeness, I note that Mr Mitchell does not retract the important part of the substance of paragraphs 43 and 44 of his 12 May 2020 affidavit. In that paragraph, he deposed that there were filing cabinets in the Easytel offices containing hardcopy folders labelled "Nexgen" and other documents labelled "Business Telecom", inside which were lead sheets, contracts and client information of the plaintiffs' customers and prospects. In paragraphs 41 and 42 of his 28 July 2020 affidavit, Mr Mitchell merely says that there were no filing cabinets in the Easytel offices and that he did not see hardcopy folders labelled "Nexgen" and other documents labelled "Business Telecom" while he was working at Nexgen. He has not retracted his evidence that Easytel had lead sheets, contracts and client information of the plaintiffs' customers and prospects. The impression created is that paragraphs 41 and 42 have been carefully crafted to give the impression that the evidence in paragraphs 43 and 44 of his 12 May 2020 affidavit is incorrect, yet neither the drafter of the 12 May 2020 affidavit nor the witness has been able to identify a proper basis to assert that the material substance of paragraphs 43 and 44 of his 12 May 2020 is incorrect.
3. For all of those reasons, Easytel has failed to discharge their onus of proving that the plaintiffs improperly obtained, and read on the hearing of the Search Order Application, Mr Mitchell's affidavit of 12 May 2020. I am not satisfied that the circumstances in which or manner in which that affidavit was prepared involved any impropriety or abuse of process on the part of the plaintiffs or their former solicitor, Mr Saadat.
Alleged abuse of process: Did the plaintiffs breach a Harman obligation?
1. The evidence relied on by the plaintiffs at the hearing of the Search Order Application on 15 May 2020 included an affidavit of Ms Barakat affirmed on 13 December 2019 and an affidavit of Mr Youssef affirmed on 13 December 2019.
2. The defendants had served those affidavits of Ms Barakat and Mr Youssef pursuant to undertakings given by them to the Court as part of orders made by consent on 29 November 2019. The undertakings were to serve on the plaintiffs an affidavit that:
"(a) identifies whether the first defendant and third defendant or their knowledge, any other person, has photocopied, printed, downloaded or copied to any device able to store or read electronic data, divulge or disclose to any other person other than an employee or director of the plaintiffs, sent by electronic mail from any email account used or accessed by the first defendant and third defendant, or preserved in physical or electronic form any information belonging to the plaintiffs which came to the knowledge or possession of the first defendant and third defendants in relation to its clients in schedule A by reason of their employment with the plaintiffs and in respect of each document or piece of information so identified:
(i) the details of the date on which that occurred;
(ii) the name of the recipient; and
(iii) the present electronic or physical location of all versions or copies of the documents or information to the best of the first, second and third defendants' knowledge, information or belief,
(b) attaches copies of all documents in the first defendants' and third defendants' possession, custody, power or control which evidence such matters; and
(c) confirms that the information and documents so provided constitute a complete and accurate disclosure of such matters or things."
1. The plaintiffs described these affidavits as "Norwich-style affidavits", referring to the principles in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133.
2. A Norwich order is an order made by a court requiring a third party who has been involved in a transaction in which another person has allegedly wrongfully used the applicant's confidential information to give information to the applicant by way of discovery concerning the identity and location of the alleged wrongdoer. A Norwich order is made if the court is satisfied that the plaintiff will probably suffer irreparable damage if there is any delay in ordering discovery. A Norwich order can be used in order to identify the party alleged to have misused the applicant's confidential information, but in certain circumstances it can also be used by requiring an existing defendant to proceedings to disclose information that will allow the applicant to trace what has happened to its confidential information: Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at [28]; Computershare Ltd v Perpetual Registrars Ltd (2000) 1 VR 626; [2000] VSC 139 at [15]–[19].
3. Easytel submitted that the affidavits had been served, but had not yet been read, in these proceedings. It was submitted that the affidavits therefore could not be used for any purpose other than that for which they had been provided, without the leave of the Court: Hearne v Street (supra). It was further submitted that the purpose for which they had been provided did not extend to obtaining search orders designed to seize material including information of the kind referred to in the undertakings and revealed by the affidavits (and by Mr Mitchell's affidavit sworn on 12 May 2020) to be in the possession of Easytel, in order to preserve it for use in the substantive proceeding. It was submitted that it was inconsistent with the obligation of full and frank disclosure when providing a "Norwich-style affidavit" for the information in the affidavit to be capable of being used against the deponent.
4. I reject these submissions for three reasons.
5. First, the Harman obligation requires a party to obtain leave before using material provided in one proceeding for the purpose of any other proceeding. The obligation does not require a party to limit its use of material provided in a proceeding for the specific purpose of the specific step pursuant to which that material was provided in the proceeding.
6. Easytel relied on the following passage from the joint judgment of Hayne, Heydon and Crennan JJ in Hearne v Street (supra) at [96] (citations omitted):
"Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits."
1. Easytel emphasised the words "use it for any purpose other than that for which it was given" in this passage.
2. Those words must be read in the context of the judgment of Hayne, Heydon and Crennan JJ as a whole, and in the context of the law as it was understood immediately prior to the High Court's judgment in Hearne v Street (supra).
3. It was well recognised that obligations of disclosure in litigation intrude on litigants' rights to privacy and confidentiality, and that the intrusion should be limited to the extent necessary to do justice between the parties to the proceeding. Accordingly, a party (and his or her solicitor) who received documents or information under the court's processes of disclosure was bound by an implied undertaking given to the court not to use the documents or information so disclosed for purposes extraneous or collateral to the proceeding: Harman (supra), especially at 302, 304 (Lord Diplock), 308 (Lord Keith of Kinkel), 312–313, 319 (Lord Scarman, Lord Simon of Glaisdale agreeing), 322–323 (Lord Roskill). That is to say, the party was permitted to use the documents or information for the proper conduct of the proceeding in which they were disclosed. The issue in Hearne v Street (supra) was whether the Harman obligation binds persons other than the party (and his or her solicitor) to the proceeding who received documents or information under the court's disclosure processes in that proceeding.
4. There is no indication in the reasons of Hayne, Heydon and Crennan JJ that their Honours intended by one sentence at [96] of their judgment to confine the use of documents and information that is permissible under the Harman obligation to something less than the proper conduct of the proceeding which the documents or information were disclosed. On the contrary, their Honours referred with approval to formulations of the obligation in terms that prohibits use in a proceeding other than the proceeding in which disclosure has been made, without the leave of the Court (at [105]; see also [107], [110]). Their Honours expressed no disagreement with the formulation of the obligation by Gleeson CJ at [1], namely not to use documents or information disclosed in a proceeding for a purpose other than the conduct of the same proceeding.
5. In my opinion, the reference to "any purpose other than that for which it was given" at [96] of the judgment of Hayne, Heydon and Crennan JJ is to be understood as meaning any purpose other than the just disposition of the proceeding in which the documents or information have been disclosed.
6. For completeness, I note that I invited counsel for Easytel to refer me to any cases subsequent to Hearne v Street (supra) in which that sentence has been applied to require the leave of the Court for the use of documents or information disclosed in a proceeding for the purpose of the same proceeding. Counsel did not refer me to any such authority.
7. Second, the Court was not referred to any authority in support of the proposition that a plaintiff in proceedings involving alleged misuse of confidential information is not entitled to use information provided in a "Norwich-style affidavit" to take steps to preserve the alleged confidential information. In my opinion, this proposition is contrary to the very purpose of a Norwich order, namely to allow the plaintiff to trace what has happened to its confidential information and to prevent irreparable damage that the plaintiff is likely to suffer if it does not receive detailed information about what has happened to its confidential information and the persons into whose hands the information has fallen.
8. Third, the obtaining of the search orders did not involve the plaintiffs using the 13 December 2019 affidavits against the deponents Ms Barakat and Mr Youssef, in any event. The search orders were obtained against Easytel Australia and Easytel Group.
9. For all of those reasons, the plaintiffs' use of Ms Barakat's and Mr Youssef's affidavits affirmed on 13 December 2019 for the purpose of the Search Order Application did not involve any abuse of process, in my opinion.
Failure to provide transcripts
1. The evidence rose no higher than establishing that a transcript of the hearing of the Search Order Application was first provided to the defendants and Easytel on 15 June 2020. It is not clear when the transcript of the hearing was first available to the plaintiffs to be provided to the defendants.
2. Any breach of the undertakings given by the plaintiffs would be a serious matter. However, it is unclear from the evidence whether there was a breach, or whether there was a delay in the transcript being available to the plaintiffs.
3. In any event, as I have noted above, Easytel did not submit that the alleged breaches of undertakings concerning transcript, by themselves, would warrant the orders sought in the Motion.
Costs of Search Order Application
1. For all the reasons above, I reject the application for an order that the plaintiffs pay the costs of Ms Barakat, Mr Youssef and Easytel of the Search Order Application on an indemnity or party-party basis.
Conclusion and orders
1. For all of the reasons above, the Motion is dismissed. I am not aware of any reason why costs should not follow the event. There will therefore be an order that Easytel pay the plaintiffs' costs of the Motion, subject to granting liberty to any party seeking a different costs order to do so by filing and serving written submissions (and any evidence relied on in support of the costs order sought) within three business days.
2. I therefore make the following orders:
1. The notice of motion filed by the fourth defendant (Easytel Australia Pty Ltd) and the first respondent (Easytel Group Pty Ltd) on 4 August 2020 is dismissed.
2. Subject to order (3), Easytel Australia Pty Ltd and Easytel Group Pty Ltd are to pay the plaintiffs' costs of and incidental to that notice of motion.
3. In the event that Easytel Australia Pty Ltd, Easytel Group Pty Ltd or plaintiffs contend that the Court should make a costs order other than order (2) above, that party is to file and serve written submissions in support of the costs order sought together with any evidence relied on in support of the application for that costs order, within three business days of the date of these orders. Each other party is to file and serve written submissions, and any evidence in reply, within a further two business days.
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ANNEXURE "A"
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 August 2020